Real Estate Acquisition Tax in Japan: A Complete Guide
What it is
Every property transaction in Japan carries a tax that most buyers do not see coming until well after they have moved in.
- A one-time prefectural tax levied on anyone who acquires land or a building in Japan — individual or corporate, resident or non-resident.
- It is triggered by purchase, new construction, extension or renovation, gift, or exchange. Acquisition by inheritance is exempt.
- It applies whether the acquisition was for consideration or free of charge, and regardless of whether the transfer is registered. Gifts between spouses and transfers under the settlement-at-inheritance gift tax system are still caught.
- It is separate from and in addition to registration and license tax, stamp duty, and the annual fixed asset tax.
- The bill does not arrive at closing. It shows up months later, which catches a lot of buyers off guard.
The tax base is assessed value, not what you paid
This single point explains why the tax is almost always far smaller than a quick calculation on the purchase price suggests.
- The base is the fixed asset tax assessed value recorded on the municipal tax ledger. It is not the purchase price or the construction cost.
- As a rough rule of thumb, land assessed value tends to run around 70% of market value, and a building around 50–60% of construction cost. So the effective rate against what you actually paid is considerably lower than the headline percentage.
- One quirk worth knowing: for newly built or extended buildings, acquisition tax uses the value at the time of construction with no depreciation adjustment, whereas fixed asset tax applies a first-year depreciation correction. The acquisition tax base is therefore usually higher than the fixed asset tax base for the same building.
The rates
What you pay depends on what you bought and what it is used for.
- Land — 3%
- Residential buildings — 3%
- Non-residential buildings (offices, shops, hotels, warehouses) — 4%
- The 3% figure is a special measure reducing the statutory 4% rate, currently in force through 31 March 2027. It has been rolled forward repeatedly, but it is not permanent.
- Villas and holiday homes are treated as non-residential and taxed at 4%. A property only used a handful of times a year may not qualify as a "dwelling" at all.
Land gets valued at half
- For residential-category land and land valued on a residential-land basis, the taxable base is halved: value × 1/2 × 3%. This applies to acquisitions through 31 March 2027.
- This is more generous than most people realise. It applies even where no house stands on the land — vacant lots, parking lots, and commercial building sites all qualify, so long as the land carries a residential-land valuation for assessment purposes.
- Effective rate on qualifying land: 1.5% of assessed value.
Exemption thresholds — raised in April 2026
Small acquisitions fall below a floor and are not taxed at all.
- On or after 1 April 2026: land ¥160,000; buildings acquired by construction ¥660,000 per unit; buildings acquired by any other means ¥340,000 per unit.
- On or before 31 March 2026: the figures were ¥100,000, ¥230,000 and ¥120,000 respectively.
- This was the first revision to the acquisition tax thresholds since 1973, driven by decades of accumulated price inflation.
- Importantly, the threshold is tested after deductions are applied — which is one reason so many ordinary home purchases end up at zero.
Relief for newly built homes
- ¥12,000,000 is deducted from the taxable base per dwelling unit.
- ¥13,000,000 for a certified long-term quality home. That measure runs through 31 March 2031.
- Floor area must be 40–240 sqm. For acquisitions on or after 1 April 2026 the lower bound was cut from 50 sqm to 40 sqm, opening the relief up to compact urban apartments that previously missed out.
- One exception: inside Tokyo's special wards, within designated priority urban regeneration districts, the 50 sqm floor stays in place until 31 March 2031.
- New builds in designated disaster-risk zones are excluded from relief — unless the build replaces a home that the owner, their spouse, or a relative within two degrees had lived in for five years or more.
- Floor area counts attached structures such as storage sheds and garages. For condominiums it includes your apportioned share of common areas; rental apartment buildings are assessed per independently partitioned unit.
- The formula: (assessed value − ¥12M) × 3%
Relief for used homes
The key restriction: this relief is only available to individuals buying a home to live in themselves. Used homes acquired as rental investments are excluded entirely. This is the most common point of confusion, and it can mean a six-figure difference on the same property depending on the buyer's intent.
- The deduction depends on when the building was originally constructed. Built 1 April 1997 or later: ¥12,000,000. Built 1 April 1989 to 31 March 1997: ¥10,000,000. Older construction dates step down through bands of roughly ¥4.5M, ¥4.2M, ¥3.5M, ¥2.3M, ¥1.5M and ¥1.0M — check the exact ladder with the prefecture, as the bands are set locally.
- Floor area 40–240 sqm for acquisitions on or after 1 April 2026 (previously 50–240 sqm).
- The building must have been constructed on or after 1 January 1982, or be certified as meeting current seismic standards.
Relief for residential land
This one is deducted from the tax amount, not from the base — which makes it unusually powerful.
- You get the higher of: (a) ¥45,000; or (b) land value per sqm × floor area × 2 (capped at 200 sqm) × 3%. Where the half-valuation applies, the per-sqm figure used is the already-halved figure.
- Qualifying situations include: building a dwelling on the land within 3 years of acquiring it; having built on the land within the preceding year; or acquiring the land together with an unused dwelling less than a year old.
- For used housing, the land and building must be acquired within one year of each other, in either direction.
- In practice this frequently wipes out the land tax completely.
Worked example
- A building assessed at ¥10M on 100 sqm of floor area, with land assessed at ¥15M over 200 sqm, comes to ¥0 on both sides.
- Building: ¥10M less the ¥12M deduction is nil.
- Land: ¥15M × 1/2 × 3% = ¥225,000, fully offset by a deduction of ¥37,500 per sqm × 200 sqm × 3% = ¥225,000.
For a typical family home, the answer really is often zero.
Deferring payment when you buy land first
- If you acquire land intending to build a qualifying home on it, collection of the reduction-equivalent portion can be deferred until the house is finished — up to 3 years for acquisitions through 31 March 2031, extending to 4 years for apartment buildings of 100 or more units.
- You have to apply to the prefectural tax office before assessment. Miss it and you pay up front and chase a refund later.
Special cases worth knowing
Buy-renovate-resell relief
- Available where a licensed real estate operator acquires a used home at least 10 years old, completes qualifying renovation, and sells it to an individual who occupies it as their own residence — all within 2 years. It applies to acquisitions between 1 April 2015 and 31 March 2027.
- The reduction equals the deduction that would have applied when the home was newly built, multiplied by the tax rate.
- Renovation spend must total at least 20% of the resale price, or ¥3,000,000 if that is lower.
- Land bought on the same day as the building can also qualify (for acquisitions from 1 April 2018), but only where the home carries the government-backed quality-assured resale certification or existing-home defect liability insurance.
Commercial and hospitality assets
- The building sits outside the definition of a dwelling, so 4% with no deduction available.
- The land is still 3% and still gets the half-valuation if it carries a residential-land assessment.
- Practical budgeting figure: roughly 4% of building assessed value plus 1.5% of land assessed value.
Buying the company instead of the asset
- Acquiring shares in a special purpose vehicle or holding company that owns the property does not trigger acquisition tax at all, because no real estate changes hands.
- On large transactions this is a meaningful saving — set against the reality that you also inherit the entity's full history and any latent liabilities.
Buyers living overseas
- Purchasers resident outside Japan are required to appoint a tax agent to receive and settle the assessment.
- Because the notice arrives long after settlement, this is easy to overlook and awkward to fix retroactively.
Filing, timing and how to actually claim the relief
- Filing is due within 30 days of acquisition in Tokyo; 60 days in most other prefectures. Osaka and Aichi both run on 60 days.
- Since 1 April 2023, no acquisition filing is required where the transfer has been registered at the Legal Affairs Bureau. But relief applications are a separate process and still have to be submitted.
- Reliefs are generally not applied automatically. Without a claim, the assessment arrives at the full unreduced figure — and plenty of people simply pay it, never realising they owed nothing.
- The notice typically arrives several months to half a year after acquisition. If relief or the exemption threshold brings the figure to zero, no notice is issued at all — so silence usually means good news rather than a lost letter.
- For newly built houses, notices generally go out around June or July of the year following acquisition.
- If you did pay and later discover you qualified, overpayments can often be refunded where a late claim is accepted, subject to the prefecture's discretion and the statutory refund window. It is worth asking.
Quick reference
New home, owner-occupied or rental
- Building: (assessed value − ¥12M) × 3%
- Land: value × 1/2 × 3%, less the greater of ¥45,000 or the per-sqm formula
Used home, individual buying to live in
- Building: (assessed value − date-based deduction) × 3%
- Land: value × 1/2 × 3%, less the greater of ¥45,000 or the per-sqm formula
Used home bought as a rental investment
- Building: assessed value × 3% — no deduction
- Land: value × 1/2 × 3% — no deduction
Hotel, office, shop or other commercial building
- Building: assessed value × 4% — no deduction
- Land: value × 1/2 × 3% — no deduction
Inheritance
- Nil on both
Share transfer of a property-holding company
- Nil on both
*Rates, deduction amounts and deadlines in this article reflect the position as of August 2026. Several of the key measures expire on 31 March 2027 and thresholds vary by prefecture, so confirm the current position with the prefectural tax office covering the property before relying on any figure here.*